Free economic zones (FEZ) in Belarus: how to become a resident?
Free economic zones (hereinafter also referred to as free economic zones) are part of the territory of the Republic of Belarus with established borders. In this territory, a favorable legal regime for commercial activities.
There are six such zones in Belarus:
The choice between Belarusian free economic zones is usually based on logistical aspects. Consequently, most of the products produced in the SEZ are exported to the EU or EAEU countries. Also of no small importance will be the cost of attracting labor resources.
The regions of Belarus differ in average wages. On the other hand, the difference between regions is often insignificant. Consequently, the cost factor of labor resources may recede into the background when registering in the SEZ.
Actual issues of work in the free economic zone.
Who can become a resident of SEZ?
Legal entities and individual entrepreneurs located in the territory of the FEZ can act as a FEZ resident. Free economic zones (their administrations) are empowered to register newly created legal entities. However, it is possible to register a legal entity initially and outside the FEZ, with a subsequent change of location in favor of the territory of the FEZ.
The founders of commercial organizations that are residents of the FEZ can be both residents and non-residents of Belarus. Registration in the FEZ can be carried out in a fairly short time.
Selection of production space.
An important task facing the leadership of the future FEZ resident is the selection of production facilities. Undoubtedly, in the selection of this premises should first of all determine the form of ownership. The easiest option would be to rent production facilities. On the one hand, this option will take the shortest possible time. On the other hand, the lease also contains some risks associated with the fact that the lease may be terminated. What will entail negative economic consequences for a FEZ resident.
Not every novice manufacturer can afford to purchase a production building or build it on the received land. Probably the best way out of this situation for such a producer would be to conclude a lease agreement with the right to purchase. The repurchase conditions can be very different and are agreed by the parties on the basis of the principle of freedom of contract.
In addition to the form of ownership, it is worth paying attention to the following factors:
- logistic component;
- the practical suitability of the property for the placement of the corresponding type of production. Often premises that have not been rented out for a long time are in poor condition;
- the presence of legal restrictions on the rental of premises;
- terms of termination of the lease.
Free economic zones and labor resources.
An important factor in choosing a free economic zone will be the availability of appropriate labor resources. Often this factor is as follows. Firstly, the availability of specialists of relevant qualifications. Secondly, in the amount of employee salaries.
It will be necessary to take into account not only the size of wages, but also the associated tax burden. That is, the size of wages will be of primary importance here for business planning.
In general, consultations with recruitment specialists should be held on this issue. And also to study the average salaries of workers in the corresponding region of Belarus.
What benefits does the free economic zone provide?
- exemption from income tax for five years from the date of declaration of profit by a resident of the FEZ;
- 50% reduction in income tax rates over the next five years;
- real estate tax exemption for buildings and structures located on the territory of the SEZ;
- the abolition of the mandatory sale of foreign currency;
- exemption from rent for 5 years for land provided for the construction of facilities to residents registered after January 1 of 2012;
- cancellation of fees at the conclusion of a lease of land that are provided without auction;
- exemption from compensation for transplantation and removal of the plant world during construction on the territory of SEZ;
- withdrawal of compensation for agricultural land losses for residents registered after January 1, 2012;
- the possibility of registering a free customs zone;
- exemption from payment of import customs duties and taxes when importing into the territory of the SEZ foreign goods (equipment and components for production) and placement under the free customs zone procedure;
- the abolition of payment of import customs duties and taxes when exporting foreign goods outside the Customs Union and placed under a free customs zone;
- exemption from payment of import customs duties and taxes when exporting finished products to the customs territory of the Customs Union (valid for residents of the SEZ until 01.01.2017 registered before 01.01.2012).
How to join the residents of the free economic zone?
Registration as a resident of the FEZ is carried out by the administration. First, an agreement is concluded with a resident on the conditions for carrying out activities on the territory of the SEZ, and they are entered into the register of residents of the SEZ. Secondly, within three business days from the date of registration, the administration issues a certificate of registration as a FEZ resident, and within ten business days it informs the necessary state authorities about registration as a FEZ resident.
In case of refusal to register as a FEZ resident, the administration is obliged to notify in writing of its decision within three working days. Subsequently, the refusal to register may be appealed to the economic court. FEZ residents are subject to the guarantees of the rights of investors, provided for by the Law of the Republic of Belarus "On Foreign Investments".
A state duty in the amount of 50 basic units is paid for registration as a FEZ resident, which as of the current date is 1 275 Belarusian rubles.
What documents are required when entering the free economic zone?
The free economic zone, represented by the administration, accepts the following documents from the applicant for resident status:
- application in the prescribed form;
- a copy of the constituent documents certified by the head of the organization, with the presentation of the originals and a copy of the certificate of state registration with the presentation of the original;
- business project;
- a document confirming payment of the state duty for registration as a resident.
The business project should be aimed at export and import substitution with an investment volume of at least 1 million euros. As a result, such a regime as a free economic zone does not imply the presence of small businesses.
Free economic zone and other preferential regimes.
Summing up, it should be said that in Belarus there are other preferential regimes for manufacturers, including foreign investors, which speaks of the advantages of doing business in Belarus.
For small and medium-sized businesses in the Republic of Belarus, preferential treatment in rural areas and small towns can be attractive, which can also be read on this website. On the one hand, the advantage of this preferential regime is the fact that the benefits are applied from the moment the company is registered. On the other hand, the disadvantage is that this preferential regime is of an urgent nature without the right to extend (7 years).
For large manufacturers, the Republic of Belarus offers the possibilities of the industrial park "Great Stone". The conditions and benefits of this industrial park are significantly different from the free economic zone.
You can learn more about registration support services in the SEZ in the following ways:
- phone + 37529 1102388 (Telegram), + 37533 6818935 (Viber, WhatsApp);
- Email: firstname.lastname@example.org;